Shopify has not proven immune to the global market downturn.
The Ottawa-based e-commerce titan announced online that it is letting to of roughly 1,000 employees, or 10% of its staff.
“The next part of the journey will involve fewer teammates than we have picked up along the way,” CEO Tobias Lütke wrote. “Shopify has to go through a reduction in workforce that will see about 10% leave by the end of the day.”
Most of the impacted roles are in recruiting, support, and sales, according to Lütke, and across the company “we’re also eliminating over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products.”
Lütke explained that when the Covid-19 pandemic set in, almost all retail shifted online; thus demand for Shopify skyrocketed.
“To help merchants, we threw away our roadmaps and shipped everything that could possibly be helpful,” he said. “Shopify has always been a company that makes the big strategic bets our merchants demand of us—this is how we succeed.”
Before the pandemic, ecommerce growth had been steady and predictable, Lütke says. Shopify bet that the channel mix—the share of dollars that travel through e-commerce rather than physical retail—”would permanently leap ahead by 5 or even 10 years.”
It’s now clear that bet didn’t pay off.
“What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point,” noted Lütke. “Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust.”
Shopify shares dropped more than 10% on the news. The stock has been surging since 2019, before falling by nearly three-quarters since the start of the year.
Lütke says that his company’s opportunity remains massive and that “it’s still early days” for Shopify, which was founded in 2006.
“This time we grow into something more focused, more driven, and more singular in mission,” stated Lütke “The times demand it of us, and we will rise to the occasion once again.”